Early February is one of my favorite times of year. The bitter cold of a Midwest winter has
settled in, the holidays are over and did I mention here in Chicago we are a
good 2-3 months away from consistently warm weather?!?! So why am I so chipper
this time of year? Because in early
February of every year I take a bird’s eye view of my investments for a
thorough performance evaluation.
A big part of going from $0 to a million is demonstrating
that Dave Ramsey’s principles work in real life. Sure, a lot of his suggestions come across as
common sense to the masses: get an emergency fund, pay off debt and live on
less than you make. But the most contentious issue on everything that is Dave
Ramsey is, “Can you really make 12% investing in the stock market?”
Some naysayers say REIT’s get good returns and that mutual
funds aren’t the only way to go. But the
majority of the “anti-Dave” crowd asserts that 12% just can’t be done. And my
super fund annual checkups put the Ramsey way of investing to the test.
For those new I’ll bring you up to speed. I follow Dave
Ramsey’s style of investing, and in some regards use an even stricter
criteria. I spread my mutual fund
investments across 4 types: aggressive growth, growth, growth and income and
international. I invest in mutual funds that have averaged at least 12% average
annualized returns since inception, and those funds have to have portfolio
managers that have lead the fund for at least 5 years. In my superfund annual assessment I look at
my average annualized returns across our Roth IRAs, our taxable brokerage
account and my 401K. A disclaimer on my
401K though: The equity options suck
through my program, so in my 401K I am currently invested in a bond fund and
include my employer’s 50% (newly reinstated by the way) match as growth on my
contribution.
I know you’ve been on pins and needles, so let’s get to
assessing! My Roth IRA is currently returning 8.45%, and my wife’s Roth is
bringing in 12.36%. My 401K, even with
instant 50% growth through the match, is currently bringing in 16.26%. And lastly,
our taxable brokerage account is swinging in at 27.95%. So across our reported investment vehicles,
we are earning 16.255% average annualized returns investing the way Dave Ramsey
teaches.
This is quite the change from last year’s 9%! For one, I found some better tools through
our broker to get more accurate calculations, but mostly our mutual funds did a
great job of riding the wave that was the bull market of 2012 that spilled into
early 2013. So I encourage you to not
only follow Dave’s advice on investing, but to please share this post with
anyone who says 12% is unattainable or does not believe “the little man” CAN
build wealth through the stock market.
The market is not rigged; you just have to make informed and well
researched decisions when investing. J
What funds are you investing in?
ReplyDeleteCan you share what funds you are investing in? When I say "12%" to my investment people at work, they look at me like I have a 3rd eye.
ReplyDeleteSeems to me like this is just a bragging "look what I did" blog. If you don't post specifics about your successes, how are you really helping those of us who are struggling?
ReplyDeleteWhat a waste
Mark. Start with Financial Peace. No need to be negative. This isn't a waste. It is inspirational for people who take initiative.
Delete